Asset obsolescence, whether the asset is tangible or intangible, may refer to a process or condition by which the asset becomes no longer useful or a form and function of the asset no longer is current or available for production or repair. For example, implementation of new technology may lead to an asset becoming less supportable due to diminished availability of parts and suppliers. Thus, obsolescence may be defined as a condition of being out of date—a loss of value occasioned by new developments that place an older asset at a competitive disadvantage and/or a decrease in the value of an older asset brought about by the development of new and more economical methods, processes and machinery.
Obsolescence of an asset may be distinguished from end of life of the asset in that end of life may simply refer to the expected or actual failure of the asset. For example, a common light bulb typically is sold with an expected number of hours of illumination before failure, but the light bulb is not obsolete just because it burns out. However, in an aspect, the same light bulb may become obsolete because of government action or regulation—for example, the Federal Government's Energy Independence and Security Act of 2007, which included provisions to phase out certain incandescent light bulbs in favor of more energy-efficient options such as fluorescent light bulbs, or the Digital Transition and Public Safety Act of 2005, which phased out non-digital television broadcasting. In another aspect, a defined end of life of an asset may refer to a designation made by the asset's manufacturer. As an example, a product manufacturer may introduce a programmed switch with a defined or stated end of life—e.g., two years—at which point the programmed switch is deemed obsolete. In yet another example, a manufacturer of programmed switches may announce the current programmed switch no longer will be supported—i.e., the programmed switch will become obsolete. In some situations involving this last example, end users of the programmed switch may be unpleasantly surprised by the “designated obsolescence” of the programmed switch.
The above examples suggest that obsolescence management may focus on actions to be taken in response to a manufacturer's announced, future discontinuance of an asset, or to an announced government regulation.